Decades of underbuilding have left the country up to 1.5 million homes short, industry says
Changes to negative gearing and capital gains tax will do little to ease Australia's housing crisis, the Property Council of Australia has warned, citing decades of underbuilding that has left the country up to 1.5 million homes short.
Speaking on radio, Property Council chief executive Mike Zorbas (pictured top) acknowledged the federal government had carved out new homes from the proposed negative gearing and capital gains tax changes, with the aim of keeping investors funding rental properties. However, he warned the measures introduce further uncertainty into an already pressured sector.
"I think these tax hikes are a big roll of the dice," Zorbas said. "They do create uncertainty, and we've got rising labour costs, rising materials costs, borrowing costs, all that volatility coming out of the Middle East.
"I genuinely hope that this series of measures does support the creation of new houses, but our modelling conducted over many years suggests it won't."
Zorbas argued that reducing the tax burden on construction would be more effective in improving affordability than adjusting investment tax settings.
"I think by the time you build a new home, the tax take from three levels of government is more than $30 for every hundred you spend," he said. "If you want to fix affordability in this country, start driving those taxes down, and you'll find that's the easiest way to do it."
On the supply side, Zorbas noted the government had included infrastructure funding to support new development, but expressed doubt this would be sufficient to offset the impact on investor activity.
"At this stage, neither of those taxes add to the supply of new housing," he said, adding that the creation of new housing supply "is the only real medicine for our housing gap."
He pointed to Australia's poor performance relative to comparable economies, noting that peer nations have built 500 homes per 1,000 people against Australia's 400, despite its significant land availability.
"This country has failed its housing exam, a big fat 'F' for 30 years," Zorbas said. "If we'd been as productive over the last 25 years as we were over the previous 25 years in creating new homes, we'd have close to 1.5 million extra homes in this country today.
"We'd not need to worry about playing with tax and we'd not need to worry about playing with migration settings."
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